The announcement of the new tax accord between smallest European country Republic of San Marino and Italy was made last week by Italian Economy Minister Giulio Tremonti. This accord is part of an economical program of the governments of Italy and San marino to fight tax avoidance by citizens of these countries.

The third tax amnesty will begin in Italy in mid-September. At the same time the government of San Marino is planning to conduct an emergency census of it’s 31,000 citizens to eliminate foreigners, mainly Italians, claiming to live in San Marino where they enjoy low taxes and strict banking secrecy . The government of Italy has organised high scale PR actions to convince tax haven account holders to come forward. Within the coming weeks San Marino is planing to complete all 12 tax information exchange agreements, in order to be removed from OECD “grey list”.

In an effort to entice Italian companies to invest back into San Marino, along with draw it’s much relied upon tourist dollar, the nation racing to sign the necessary Tax Information Exchange Agreements (TIEA) to improve the view that the OECD takes of it.

San Marino was classed as a Blacklist nation by the OECD until 2003, due mostly to its alleged use by Italians for tax haven purposes. Increased international pressure for financial transparency, a Fitch rating downgrade and a forecasted 2010 budget deficit has now prompted San Marino officials to seek an improvement in its global financial standing. To achieve this San Marino needs to sign 12 TIEAs, of which two have already been completed, and with a further three sitting on the verge of completion.

San Marino Secretary of State for Foreign Affairs Antonella Mularoni said the following in regards to this upcoming task “There’s just a little more than a month to go, but we have reasonable expectations that this objective will be reached. There’s pressure on lots of countries, so everyone wants to do these accords to get off these lists.” She went onto say, in regards to the benefits of San Marino as a financial center “In small states like ours, decisions are taken rapidly, bureaucracy is limited and we also have stability. So we want to favour companies that want to base themselves here, if they’re strategically interested in southern Europe.”